2009 Budget Highlights - Home-buying and home ownership.

January 29, 2009

2009 Budget Highlights - Home-buying and home ownership.

1st Time Home buyer RRSP withdrawal benefit increased from $20,000 to $25,000

Upto $1350 tax break for home improvements.

First-time home-buyers who are eyeing the market, and those interested in making renovations in the next 1 year, are also on the government's thoughts this year. To encourage home ownership and home construction, the finance minister proposes to increase the amount first-time homebuyers can withdraw from their RRSPs to purchase or build a home  from $20,000 to $25,000. It also proposes to establish a first-time homebuyer's tax credit which could amount to $750 worth of savings on closing costs.

With buyers market currently dominating and interest rates at lowest levels in decades, if you are the 1st time home buyer, this is a added bonus.

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The second "limited-time offer" being offered up in this budget is a temporary home renovation tax credit. Until January 31, 2010, this proposed measure will provide tax relief for home renovation costs. Once calculated on a client's 2009 tax return, the savings could work out to $1,350 for each family. i.e. a tax credit of up to 15 per cent of renovation costs over $1,000, to a maximum of $10,000. The 15 per cent comes off taxes owing, but isn't refundable so if it exceeds the total tax bill, there's no refund. The credit comes one to a household, although any member may claim it.

The program covers a variety of projects, including renovations to houses, cottages and condos. In addition to major work such as rebuilding a kitchen or bath, or finishing a basement, it covers a lot of smaller upgrades. New flooring or rugs, a new furnace or water heater, a refinished driveway, sod for the lawn, interior and exterior painting are all covered.

It doesn't cover things such as new furniture, household electronics or maintenance contracts for snow removal, pool cleaning and the like.

But householders who make energy-saving home improvements will be able to essentially double-dip because they are eligible for grants under the ecoENERGY retrofit program as well as the new tax credit.

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